Consumer prices tick upward

Inflation posts biggest increase in four months

Published 5:30 am, Thursday, March 24, 2005

WASHINGTON - Consumer prices in February registered their biggest increase in four months, forcing people to shell out more to cover energy, medical and education bills.

The latest snapshot of inflation, released by the Labor Department on Wednesday, raised chances the Federal Reserve might have to be more aggressive in its interest-rate-raising campaign, economists said.

Gaining momentum

The pickup in inflation came after consumer prices were flat in December and increased by just 0.1 percent in January. The February increase confirmed the more hawkish tone about inflation that Fed policymakers took on Tuesday.

Sharp increases in energy costs, including gasoline, led the way in February. But many other prices, including those for air travel, medical care, education and lodging also climbed.

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Excluding energy and food prices, core prices rose 0.3 percent in February. That compares with a 0.2 percent increase in January and is the largest increase since September. For the 12 months ending with February, core prices rose 2.4 percent.

With the economy expanding, some companies are finding it easier to boost prices, analysts said. A weaker U.S. dollar also is putting pressure on prices of imported goods, giving U.S. firms room to raise prices.

Used-home sales dip

In other economic news, sales of previously owned homes dipped 0.4 percent in February to a seasonally adjusted annual rate of 6.79 million, the
National Association of Realtors
reported. The pace of sales was considered healthy.